Web III convenes; few remaining services to resist fair royalties for digital music

Washington – SoundExchange, the non-profit performance rights organization which collects and distributes digital performance royalties for sound recordings, made opening remarks today before the Copyright Royalty Board (CRB), stating its case for continued fair royalty rates as the CRB convenes proceedings to set webcasting rates for 2011-2015.

This CRB proceeding is being held to set general rates for royalties paid to recording artists and copyright holders for the use of sound recordings by webcasters. These rates will ultimately apply to very few webcasters, however. In the past year, SoundExchange has negotiated eight alternative rate structure agreements, tailored to the needs and concerns of diverse business models. These optional models currently include more than 90% of the webcasting market, who are therefore not subject to the to-be-determined rates. The only remaining commercial service in the proceeding is Live365, which is seeking to pay less than half of the value paid by similar services.

“We prefer to work with webcasters as partners and not adversaries, and we have been flexible in reaching numerous business solutions which benefit the industry as a whole,” said Michael Huppe, Executive Vice President and General Counsel at SoundExchange. “When necessary, however, we stand ready to defend our artists and rights owners to ensure that they are fairly paid for their work which, after all, forms the backbone of any music service.”

Currently, CRB standard rates for 2010 are $0.0019 “per performance” (the rate is charged per listener, per track) – royalties which are distributed by SoundExchange to the artists and rights owners who helped to create that recording. SoundExchange proposes that the rate be increased to $0.0021 for 2011. Both current and proposed rates include incremental annual increases, to compensate for inflation and reflect the increasing value of sound recordings.

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About SoundExchange: SoundExchange is the non-profit performance rights organization that collects statutory royalties from satellite radio, internet radio, cable TV music channels and other services that stream sound recordings. The Copyright Royalty Board, created by Congress, has entrusted SoundExchange as the only entity in the United States to collect and distribute these digital performance royalties for featured recording artists and master rights owners. SoundExchange currently represents over 5,500 record labels, over 45,000 featured artists, and has paid out more than $412 million in royalties since its creation in 2003.www.SoundExchange.com